Brussels 23 June 2009 - The European Union has requested WTO consultations with China regarding China's export restrictions on a number of key raw materials, which it considers are in clear breach of international trade rules. The EU has raised the issue with China repeatedly over the past years without success, and now hopes to use the WTO consultation process to arrive at a mutually satisfactory solution with China. The United States has also today requested consultations with China on this issue.
EU Trade Commissioner Catherine Ashton said: "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn. I hope that we can find an amicable solution to this issue through the consultation process."
European industries have raised concerns for a number of years on export restrictions – quotas, export duties and minimum export prices – which China applies on key raw materials, such as yellow phosphorous, bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide and zinc. Some of these resources cannot be found elsewhere.
Restrictions on raw materials give Chinese companies an unfair advantage, as downstream industries in China have access to cheaper materials than their competitors outside China. The chemical, steel and non-ferrous metal industries, as well as their downstream clients, are the main sectors concerned.
The EU considers that these restrictions are in violation not only of general WTO rules, but also of specific commitments that China signed up to as part of the WTO Accession Protocol, which set out either prohibitions against the use of export duties or strict caps on a limited number of products, as well as disciplining the use of export licensing and binding minimum export prices.
The consultations requested focus on a first batch of measures and products. The EU concerns are not limited to these and work on others will continue, with the possibility of further action still open.
China is the single most important challenge for EU trade policy. Barriers 'behind the border' in the Chinese market are costing European businesses lost opportunities for exports. China has re-emerged as the world's fourth-largest economy and third-ranked exporter, but also as an increasingly important political power. EU-China trade has increased dramatically in recent years and now totals over EUR 300 billion. China is now the EU's 2nd trading partner behind the USA and the biggest source of EU imports. The EU is China's biggest trading partner.